Risk Appetite Finds Some Legs As Economic Data Steadies In Both Asia And EU Regions

Notes/Observations

• latest economic data from China offered some reassurance to investors concerned about global growth outlook
• Risk appetite aided as geopolitical concerns remained in the background
• Germany Jan Retail Sales and Feb Unemployment data beat expectations
• Major European PMI Manufacturing data was generally upbeat (Beats: Euro Zone, France, Italy, Swiss, Sweden; Misses: Spain, Poland ; in-line: Germany, UK, Czech, Norway, )

Asia:

• Japan Jan Jobless Rate: 2.5% v 2.4%e
• South Korea Feb Trade Balance: $3.1B v $3.3Be ; Exports registered its largest decline in ~3 years (Y/Y: -11.1% v -9.5%e)
• China Feb Caixin PMI Manufacturing registered its 3rd consecutive contraction but handily beat expectations (49.9 v 48.5e); data reassured markets concerned about global growth outlook
• US officials said to be preparing a final trade deal that President Trump and his Chinese counterpart Xi Jinping could sign in weeks. Debate continued in Washington over whether to push Beijing for more concessions. US said to be eyeing a summit between the two presidents as soon as mid-March but planning has been complicated by President Xi’s need to lead China’s annual National People’s Congress in early March

Europe:

• UK Labour Party (opposition) could let PM May’s Brexit deal pass in return for second referendum in a compromise plan. Proposal would make clear that parliament “withholds support” until it has been put to a public vote
• Eurogroup chief Centeno: Process to reform Euro Zone to face future crises is underway; strengthening the euro is the best response to uncertainty

Americas:

• Fed Chair Powell reiterated that thes FOMC would be ‘patient’ as it determined future rate moves
• Fed’s Harker (hawk, non-voter) saw one hike in 2019 and one next year as appropriate; potential risks tilted very slightly downside Macro

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.53% at 374.98, FTSE +0.57% at 7,115.25, DAX +1.03% at 11,634.02, CAC-40 +0.73% at 5,278.76, IBEX-35 +0.59% at 9,332.49, FTSE MIB +0.57% at 20,774.50, SMI +0.51% at 9,433.30, S&P 500 Futures +0.58%]
• Market Focal Points/Key Themes: European Indices trade higher across the board tracking gains in Asia overnight and higher US futures. With positive data out of China providing the positive momentum, with the Shanghai index up almost 2%. On the corporate front, earnings continue to take center stage with UK advertising name WPP trading sharply higher after inline results after client losses seen in the year. Robert Walters also gains on earnings with Rheinmetall, Momcler, Ferrovial and Viscofan among other names higher on earnings. Man Group declines around 2% after a fall in AUM; Bookmaker William Hill reverses earlier losses after a contraction in profits while Rightmove declines on earnings and the stepping down of its Chairman in 2020. Another notable decliners include Bekaert, Coats and Revolution Bars following earnings. In other news Sixt trades over 5% higher on the launch of its car sharing app; Pantheon Resources trades sharply lower following its Winx-1 exploration well drilling update. Looking ahead notable earners include Footlooker, Dentsply Sirona and Tribune Media among others.

Equities

• Consumer discretionary: WPP [WPP.UK] +7% (earnings), Moncler [MONC.IT] +11% (earnings), Robert Walters [RWA.UK] +11% (earnings), William Hill [WH.UK] -0.5% (earnings), Bonduelle [BON.FR] -2% (earnings), Bureau Veritas [BVI.FR] +3% (analyst action)
• Materials: Rheinmetall [RHM.DE] +7.5% (earnings)
• Financials: Man Group [EMG.UK] -4.5% (earnings), London Stock Exchange [LSE.UK] +3.5% (earnings)
• Healthcare: Orphazyme [ORPHA.DK] -7.5% (earnings)
• Industrials: Faurecia [EO.FR] +4% (to acquire Clarine in Japan)
• Technology: Serviceware [SJJ.DE] +8.5% (earnings), Next Biometrics [NEXT.NO] -5% (offering)

Speakers

• Former UK Brexit Min Raab stated that the substance of Brexit deal needed to be changed; UK must be able to exit the backstop. Believed that a no-deal outcome would be preferable to an extension of Article 50
• Sweden Central Bank (Riksbank) Dep Gov Skingsley term extended for another six years (Until May 2025)
• Former PBoC advisor Yu Yongding: China must reject US demands to keep the CNY currency (Yuan) stable as part of a trade agreement but could commit to maintain an artificially low level

Currencies/Fixed Income

• USD/JPY was approaching the 112 level for 10-week highs as the latest economic data from China offered some reassurance to investors concerned about global growth outlook. JPY selling also aided as risk appetite was aided as geopolitical concerns (India/Pakistan; Korean Peninsula) remained in the background. The weaker yen also boosted as the yield on 10-year US Treasury rose to a 3-week high of 2.72%.
• EUR/USD was slightly lower at 1.1360 area as the European data saw a mixed bag in the session. Employment data continued to show healthy trend buts Euro Zone Feb Flash CPI data was mixed as headline improved from month-ago level but core rate remained stubborn.

Economic Data

• (IN) India Feb PMI Manufacturing: 54.3 v 53.9 prior (18th month of expansion and highest since Dec 2017)
• (IE) Ireland Feb Manufacturing PMI: 54.0 v 52.6 prior (69th month of expansion)
• (RU) Russia Feb PMI Manufacturing: 50.1 v 50.9 prior (5th month of expansion)
• (DE) Germany Jan Retail Sales M/M: 3.3% v 2.0%e; Y/Y: 2.6% v 1.2%e
• (TR) Turkey Feb PMI Manufacturing: 46.4 v 44.2 prior (11th straight contraction)
• (SE) Sweden Feb PMI Manufacturing: 52.5 v 51.4e
• (TH) Thailand Feb Business Sentiment Index: 49.9 v 50.0 prior
• (CH) Swiss Jan Real Retail Sales Y/Y: -0.4% v +0.4%e
• (FR) France Jan YTD Budget Balance: -€17.3B v -€76.1B prior
• (CN) Weekly Shanghai copper inventories (SHFE): 227.1Ke v 217.8K tons prior
• (CZ) Czech Q4 Preliminary GDP (2nd reading) Q/Q: 0.9% v 1.0% advance; Y/Y: 2.8%e v 2.9% advance
• (NL) Netherlands Feb Manufacturing PMI: 52.7 v 55.1 prior (66th month of expansion but lowest since Jun 2016)
• (NO) Norway PMI Manufacturing: 56.3 v 56.3e (8th month of expansion)
• (HU) Hungary Feb Manufacturing PMI: 55.7 v 54.7 prior (39th month of expansion)
• (PL) Poland Feb PMI Manufacturing: 47.6 v 48.2e (4th straight contraction)
• (HU) Hungary Q4 Final GDP Q/Q: 1.0% v 1.1%e Y/Y: 5.1% v 5.0%e
• (AT) Austria Q4 Final GDP Q/Q: 0.3% v 0.2% prior; Y/Y: 2.4% v 2.3% prior
• (AT) Austria PPI M/M: +0.1% v -0.7% prior; Y/Y: 1.6% v 1.9% prior
• (RU) Russia Narrow Money Supply w/e Feb 22nd (RUB): T v 10.30T prior
• (ES) Spain Feb Manufacturing PMI: 49.9 v 51.7e (1st contraction in over 5 years)
• (CZ) Czech Republic Feb Manufacturing PMI: 48.6 v 48.6e (3rd straight contraction and lowest since Jan 2013)
• (CH) Swiss Feb PMI Manufacturing: 55.4 V 53.5e
• (IT) Italy Feb Manufacturing PMI: 47.7 v 47.2e (5th straight contraction and lowest since May 2013)
• (FR) France Feb Final Manufacturing PMI: 51.5 v 51.4e (confirmed 2nd straight expansion)
• (DE) Germany Feb Final Manufacturing PMI: 47.6 v 47.6e (confirmed 2nd straight contraction and lowest since Dec 2012)
• (DE) Germany Feb Unemployment Change: -21K v -5Ke; Unemployment Claims Rate: 5.0% v 5.0%e
• (EU) Euro Zone Feb Final Manufacturing PMI: 49.3 v 49.2e (confirmed 1st contraction in 68 months and lowest since Jun 2013)
• (IT) Italy Jan Preliminary Unemployment Rate: 10.5% v 10.4%e
• (GR) Greece Feb Manufacturing PMI: 54.2 v 53.7 prior (21st month of expansion)
• (ZA) South Africa Feb Manufacturing PMI: 46.2 v 49.5e (2nd straight contraction)
• (IS) Iceland Q4 GDP Q/Q: 2.7% v 0.0% prior; Y/Y: 5.2% v 2.6% prior
• (NO) Norway Feb Unemployment Rate: 2.5% v 2.5%e
• (UK) Feb PMI Manufacturing: 52.0 v 52.0e (31st month of expansion)
• (UK) Jan Net Consumer Credit: £1.1B v £0.8Be; Net Lending: £3.7B v £3.9Be
• (UK) Jan Mortgage Approvals: 66.8K v 63.4Ke
• (UK) Jan M4 Money Supply M/M: 0.2% v 0.5% prior; Y/Y: 0.5% v 2.0% prior; M4 Ex IOFCs 3M Annualized: 2.4% v 4.3% prior
• (EU) Euro Zone Feb Advance CPI Estimate: 1.5% v 1.5%e; CPI Core Y/Y: 1.0% v 1.1%e
• (EU) Euro Zone Jan Unemployment Rate: 7.8% v 7.9%e (lowest level since Dec 2008)
• (IT) Italy 2018 Annual GDP Y/Y: 0.9% v 0.8%e; Budget Deficit to GDP: 2.1% v 1.9%e
• (DK) Denmark Feb PMI Survey: 61.6 v 50.0 prior
• (BE) Belgium Jan Unemployment Rate: 5.6% v 5.5% prior

Fixed Income Issuance

• (IN) India sold total INR120B vs. INR120B indicated in 2021, 2027, 2032, 2035 and 2046 bonds
• (ZA) South Africa sold total ZAR650M vs. ZAR650M indicated in I/ L 2029, 2038 and 2050 bonds

Looking Ahead

• (ZA) South Africa Feb Naamsa Vehicle Sales Y/Y: % v -7.4% prior
• (RU) Russia Feb Sovereign Wealth Funds: Wellbeing Fund: No est v $59.1B prior
• (IT) Italy Feb Budget Balance: No est v €1.4B prior
• (RO) Romania Feb International Reserves: No est v $35.8B prior
• (US) Monthly US Total Vehicle Sales data from major auto makers
• (AR) Argentina Feb Government Tax Revenue (ARS) No est v 363.9B prior
• (MX) Mexico Jan YTD Budget Balance (MXN): No est v -495.0B prior
• 06:00 (PT) Portugal Jan Industrial Production M/M: No est v 1.1% prior; Y/Y: No est v -0.3% prior
• 06:00 (PT) Portugal Jan Retail Sales M/M: No est v 0.6% prior; Y/Y: No est v 4.2% prior
• 06:00 (UK) DMO to sell €6.0B in 1-month, 3-month and 6-month bills (£2.0B, £2.0B and £2.0 respectively)
• 06:30 (IN) India Weekly Forex Reserves w/e Feb 22nd: No est v $398.3B prior
• 06:45 (US) Daily Libor Fixing
• 08:00 (CZ) Czech Feb Budget Balance (CZK): No est v 8.8B prior
• 08:00 (BR) Brazil Feb PMI Manufacturing: No est v 52.7 prior
• 08:00 (UK) Baltic Dry Bulk Index
• 08:00 (IN) India announces upcoming bill issuance (held on Wed)
• 08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming issuance
• 08:30 (US) Jan Personal Income: 0.3%e v 0.2% prior; Personal Spending: -0.2%e v +0.4% prior; Real Personal Spending (PCE): -0.3%e v +0.3% prior
• 08:30 (US) Jan PCE Deflator M/M: 0.0%e v 0.1% prior; Y/Y: 1.7%e v 1.8% prior
• 08:30 (US) Jan PCE Core M/M: 0.2%e v 0.1% prior; Y/Y: 1.9%e v 1.9% prior
• 08:30 (CA) Canada Dec GDP M/M: 0.0%e v -0.1% prior; Y/Y: 1.4%e v 1.7% prior; Quarterly GDP Annualized: 1.0%e v 2.0% prior
• 08:30 (CA) Canada Jan MLI Leading Indicator M/M: No est v -0.3% prior
• 09:30 (CA) Canada Feb Manufacturing PMI: No est v 53.0 prior
• 09:45 (US) Feb Final Markit Manufacturing PMI: 53.7e v 53.7 prelim
• 10:00 (US) Feb ISM Manufacturing: 55.7e v 56.6 prior; Prices Paid: 51.8e v 49.6 prior
• 10:00 (US) Feb Final University of Michigan Confidence: 95.9e v 95.5 prelim
• 10:00 (CO) Colombia Feb PMI Manufacturing: No est v 48.5 prior
• 10:00 (MX) Mexico Jan Total Remittances: $2.5Be v $2.9B prior
• 10:00 (MX) Mexico Central Bank Economist Survey
• 10:30 (MX) Mexico Feb PMI Manufacturing: No est v 50.9 prior
• 11:00 (EU) Potential sovereign ratings after European close (Moody’s on Greece ) In Feb 2018 Moody’s raised Greece sovereign rating two notches to B3)
• 12:00 (IT) Italy Feb New Car Registrations Y/Y: No est v -7.6% prior
• 12:50 (US) Fed’s Bostic (dove, non-voter) remarks at Luncheon at Economic Policy Conference
• 13:00 (US) Weekly Baker Hughes Rig Count data
• 13:00 (BR) Brazil Feb Trade Balance:$3.0Be v $2.2B prior
• 13:00 (MX) Mexico Feb IMEF Manufacturing Index: 50.0e v 49.8 prior; Non-Manufacturing Index: 50.4e v 50.6 prior
• 13:15 (US) Fed’s Bostic (dove, non-voter)